Tech sector least financed in India in last 5 years: Report

Tech funding crisis: According to a new report released on Wednesday, India suffered a third consecutive decline in tech funding in a quarter this year, making the July-September quarter (Q3) the least financed in the previous five years.

According to data from market intelligence company Tracxn, Q3 2023 saw a sharp dip in investment, with a total of $1.5 billion raised, representing a 29 per cent drop from the prior quarter and a startling 54 per cent drop compared to Q3 2022.
When compared to the same quarter last year, late-stage rounds saw a reduction of 33 per cent, while early-stage and seed-stage funding fell by 74 per cent and 75 per cent, respectively.

The third quarter witnessed five funding rounds exceeding $100 million, including companies such as Perfios, Zepto, Ola Electric, Ather Energy, and Zyber 365, with Perfios leading the way with a Series D round of $229 million.

Only two unicorns were added in Q3 -- quick grocery delivery platform Zepto and Web3 and AI-based OS Zyber 365 -- representing a 50 per cent decline compared to the previous year.

“Despite facing the challenges of a funding winter, India ranks as the fifth highest funded country in Q3 2023 and maintains its fourth-place position in terms of total funding for the year to date (YTD),” said Neha Singh, Co-Founder, Tracxn.

Due to the widespread and quick acceptance of UPI in both local and foreign markets, the fintech sector experienced a growth of 68% from the previous quarter.

In addition, 33 acquisitions were made during the quarter, which is 13 per cent fewer than in Q3 2022.

“A promising sign is the month-on-month funding growth, with an impressive 91 per cent increase from $376 million in August 2023 to $720 million in September 2023,” said Abhishek Goyal, Co-Founder, Tracxn.

Bengaluru took the top spot in terms of total capital raised during Q3, closely followed by Noida and Mumbai, reiterating the importance of these tech hubs in India's startup ecosystem.

Top investors in Q3 2023 included Peak XV Partners, Accel, and Blume. Elevation, Tiger Global Management, and Accel were notable in early-stage investments, while IPV, 100X.VC, and Titan Capital topped the seed investments.